Date: 20010518
Dockets: 2000-2088-IT-I; 2000-3092-IT-I
BETWEEN:
GOPALACHARI RAGHAVAN,VASUNDARA RAGHAVAN,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
_____________________________________________________
Agent for the Appellants: Gopalachari Raghavan
Counsel for the Respondent: Steven D. Leckie
_____________________________________________________
Reasons for Judgment
(delivered orally from the Bench on April 26, 2001 at Toronto, Ontario)
Campbell, J.
[1] These appeals were heard together by consent of the parties on common evidence. Both appeals are in respect to the Appellants' 1996 and 1997 taxation years.
[2] In computing her income in the 1996 and 1997 taxation years, the Appellant, Mrs. Vasundara Raghavan, deducted amounts as child care expenses and reported her marital status as "separated". In computing taxes payable for these same taxation years, this Appellant deducted a non-refundable tax credit for an equivalent to spouse amount. She also made application for the Goods and Services Tax (the "GST") credit and for the Harmonized Sales Tax (the "HST") credit as well as for the child tax benefit for these years on the basis that she was separated.
[3] In assessing Mrs. Raghavan, the deductions for child care expenses were allowed as well as the non-refundable tax credits for the equivalent to spouse amounts in each of the taxation years. In addition, in determining the Appellant's entitlement for the GST credit and HST credit and for the child tax benefits, the Minister accepted Mrs. Raghavan's reported marital status as "separated".
[4] The Minister reassessed and disallowed the child care expense deductions and allowed those deductions in computing the income of the Appellant Mr. G. Raghavan. The Minister also disallowed the non-refundable tax credit for an equivalent to spouse amount. A redetermination of Mrs. Raghavan's entitlement to the GST and HST credits and the child tax benefits was made on the basis that Mrs. Raghavan was not separated from the Appellant, Mr. G. Raghavan, in the 1996 and 1997 taxation years.
[5] The Appellant, Mr. G. Raghavan, in computing income in these taxation years, and in making application for the GST and HST credits, deducted zero amount as child care expenses and reported his marital status as "separated". In assessing this Appellant, Mr. G. Raghavan, and in allowing him the GST and HST credits, the Minister did not allow a deduction for child care expenses and his reported marital status of "separated" was accepted by the Minister.
[6] In reassessing this Appellant, Mr. G. Raghavan, the Minister allowed the deductions of the child care expenses, deductions previously claimed in the returns of income made by the Appellant, Mrs. Raghavan. A redetermination of the Appellant's (Mr. G. Raghavan) entitlement to the GST and HST credits was also made on the basis that the Appellant and his spouse, Mrs. V. Raghavan were not "separated" during these taxation years.
[7] The primary issue to decide is whether during the 1996 and 1997 taxation years, the Appellants', Mr. and Mrs. Raghavan, were spouses pursuant to subsection 252(4) of the Income Tax Act (the "Act"). More specifically I must decide if the Appellants, who were not divorced, were living separate and apart while residing under the same roof. The entitlement of each of these Appellants to deductions for child care expenses and non-refundable tax credits for an equivalent to spouse amount, together with entitlement to GST and HST credits and child tax credits for the 1996 and 1997 taxation years, are dependent upon my decision in respect to this issue of living "separate and apart".
[8] The Appellants have two sons and one daughter. Their evidence was that they separated in February, 1996. The husband testified that for approximately one week he moved out of the bungalow the family shared and then moved back into the basement suite of the house. Photos were submitted as an exhibit to show that the basement suite has kitchen, sleeping, and washroom facilities together with a separate exterior entrance. The Appellant, Mrs. Raghavan, stated that she continued to live in the upstairs part of the bungalow with the three children. She used the front entrance of the bungalow which was separate from that used by her husband. She testified that she added a lock and latch to the door that led from the upstairs to the basement suite. According to the evidence, the Appellants split the household bills including the mortgage on a percentage basis with the wife paying 70% and the husband paying 30%. No separation agreement was ever entered into and neither Appellant ever sought out the advice of a lawyer.
[9] Subsection 252(4) is the governing provision here. It defines the word "spouse" and makes express reference to parties living in a conjugal relationship. Whether spouses are living separate and apart during any particular time involves a question of fact. Each case must necessarily be determined through a consideration of the particular circumstances and unique facts involved in that case.
[10] In defining "separate and apart", J. Bowman in Kelner v. R., [1996] 1 C.T.C. 2687 relied upon and quoted the criteria set out in Cooper v. Cooper, (1972) 10 R.F.L. 184 as follows:
...generally speaking, a finding that the parties were living separate and apart from each other has been made where the following circumstances were present:
(i) Spouses occupying separate bedrooms.
(ii) Absence of sexual relations.
(iii) Little, if any, communication between spouses.
(iv) Wife performing no domestic services for husband.
(v) Eating meals separately.
(vi) No social activities together.
[11] There are many cases in this area of the law but at the end of the day each case must be determined on its own unique facts viewed in their entirety.
[12] Other than the evidence of the Appellants that they were living separate and apart in this bungalow in 1996 and 1997, there was no other supporting third party evidence introduced and scant other evidence was introduced that would support this contention. They were never divorced, no separation agreement was signed, neither Appellant ever sought any type of legal advice. Reference was made to the fact that lawyers would be costly and yet the evidence indicated that neither Appellant ever actually contacted a lawyer as to costs. Even if the necessary legal services required to sever this relationship were too costly, Mrs. Raghavan made absolutely no attempt to remove her husband's name from the life insurance, pension or medical and dental benefits available through her employment. There was no evidence that she ever inquired what steps could be taken to sever her husband's name from her employment benefits.
[13] The husband gave evidence that his wife was named as beneficiary on his R.R.S.P. and he made no attempt to change or alter this during the period of the separation.
[14] A joint trading account in both names at R.B.C. Dominion Securities continued unchanged. Each Appellant reported one-half of a dividend amount in respect to this account. Each Appellant also reported one-half of a small amount of earned interest in their returns.
[15] The evidence also points to the fact that the Appellant, Mr. Raghavan, assisted his wife Mrs. Raghavan, in completing her tax returns. Each Appellant operated their own business but Mrs. Raghavan testified she did not know a great deal about these businesses. In completing her returns she relied on her husband's investment and computer knowledge. The evidence was that the husband's assistance was provided through the two teenage sons. In answering questions, Mrs. Raghavan appeared to know very little about the business which she said was hers and that the sons operated on her behalf.
[16] The evidence of both Appellants was somewhat confusing in this area but it appeared they each operated a business and asked the Court to believe that two teenage boys, who I believe at the time were 17 and 14 years old, were making the telemarketing calls, etc. with supervision of the father. The tax returns confirmed that the sons were paid wages but there never was revenue earned in either business. Because the evidence of both Appellants was confusing and evasive, I do not accept that this was the whole picture surrounding these businesses and the family's approach to their operations. But for the purposes of this analysis I do not believe that I need comment further than to state that this was just additional evidence that the financial arrangements of both Appellants remained closely intertwined throughout this period.
[17] The deed and mortgage on the bungalow remained unchanged. There was really no division of assets ever contemplated, much less attempted. There was no evidence whatsoever that either Appellant made any attempt to sever their financial ties to and with each other. And neither Appellant felt the need to obtain legal advice regarding their respective rights and liabilities resulting from such intermingling of financial arrangements.
[18] Mrs. Raghavan testified that she told only a babysitter/friend and her mother in India of the marital situation. She stated that she did not discuss her marriage with her co-workers or her friends that both she and the Appellant had as a couple. She said she did not date. Mr. Raghavan stated that he had occasion to date several women he met through his work. Both Appellants were hesitant in answering questions in the area of their social activities during this period and consequently their evidence was again contradictory and confusing.
[19] Mail continued to be delivered to the property as it always had been. No effort was made to separate the mail for delivery to the basement suite and the evidence was that the children divided it according to which parent it was for.
[20] The Appellants stated they did not take meals together. The laundry room was located in the basement and the evidence was that the children and their mother used these facilities and came down through the interior locked door. The Appellant, Mr. Raghavan, responded that he "possibly" saw Mrs. Raghavan use this door and stairs to do laundry.
[21] In summary, the continued equal splitting of dividend income and interest reported on tax returns of both Appellants, the deed of conveyance to the house along with the mortgage remaining unchanged, the R.B.C. Dominion Securities monthly statement accounts, the continued intermingling of financial and business affairs, the absence of any attempt whatsoever by the wife to remove her husband's name as beneficiary on employment benefits or even inquire what steps she could take to do so, the assistance of the husband in completing the wife's tax returns and operating two businesses with the help of teenage sons, are all factors that point to a continuing and ongoing relationship between the Appellants. I am left with no supporting evidence of third parties to support the Appellants' testimony which was not straightforward but contradictory and confusing. The evidence of the Appellant, Mr. Raghavan, was evasive at times.
[22] Yes, Appellants such as these can certainly live separate and apart under the same roof if the evidence with reference to the criteria set down in the case law supports such a finding. Here it does not. To the general public, there was apparently no appearance of them living separate and apart. Their neighbours, friends, bankers, and co-workers, according to the evidence of the Appellants, had no reason to believe this was anything but a continuing viable family unit.
[23] In light of the evidence adduced in the present case, which is quite unsatisfactory in many respects, and remembering that the onus is on the Appellants, I must conclude that the Appellants were spouses and were not living separate and apart during the years in question.
[24] The Appellants also raised a Charter issue. They argued that there is discrimination under section 15 of the Charter based on their financial inability to pursue separate residences, legal services etc. As I understand it, the Appellants argued that this was discriminatory and infringed on their rights and freedoms as guaranteed by the Charter.
[25] The practice of this Court is to hear argument when a constitutional issue is raised and there has been no compliance with the notice requirements of section 57. If there is merit to the Charter argument, I would adjourn to a future date for compliance with the notice requirements. If I conclude there is no merit, I would dispose of the appeal accordingly without future reference to notice requirements. I suggest Respondent counsel acquaint himself with the practice of this Court and I refer counsel to the case of Langlois v. R., 1999 Carswell Nat. 1695, a Federal Court of Appeal decision.
[26] Subsection 15(1) of the Canadian Charter of Rights and Freedoms states:
Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
[27] The nature of the discrimination must be based on a personal characteristic. I find there is no merit in the Appellant's argument and even if there were they chose to present no evidence other than in their summation as to their financial ability in this regard. The Appellant, Mr. Raghavan, was a financial advisor. The Appellant, Mrs. Raghavan, is a computer analyst with Bell Canada Ltd. Certainly they both had resources at their disposal to have taken steps to extricate themselves from this relationship. There is no discrimination pursuant to the Charter.
[28] I accordingly dismiss their appeals.
Signed at Ottawa, Canada, this 18h day of May 2001
"Diane Campbell"
J.T.C.C.